Jim Cramer's 'Off the Charts': The Trump Rally Is Starting to Lose Steam

With the Dow Jones Industrial Average on the precipice of breaking the 20,000 threshold, Jim Cramer enlisted chartist Carolyn Boroden of FibonnaciQueen.com and Real Money during his Mad Money "Off the Charts" segment to make sense of the market's recent run to see whether the good times can keep rolling.

The charts show the Dow and S&P 500 are currently in a bullish swing, making higher highs as well as higher lows. Both indices are above the 200-day moving average and the 50-day moving average. These are all signs the indices have more room to run, Cramer told viewers.

However, looking at the charts from a technical standpoint using the Fibonacci method discovered by Leonardo Fibonacci and mastered by Boroden, Cramer told viewers there are signs that investors should think about being more cautious.

Cramer said Boroden looks at the size of past swings and the duration of those swings, then filters them through the lens of Fibonacci ratios -- 23.6%, 38.2%, 50%, 61.8% and 100%.

Using this method, Boroden came to the conclusion the run-up the Dow and S&P may be running out of fuel. When Boroden sees multiple time cycles coming together at the same moment, she looks for a possible reversal of whatever activity the market has been showing.

In the case of these two indices, the confluence of time cycles suggests the current rally will pause and could even possibly begin to pull back. While these indicators are not enough to definitively say that the Trump rally is coming to an end, it does indicate that the market could be approaching an important decision point.

Boroden sees the ceiling for the current rally running from between 20,098 to 20,193, so even if the Dow breaches the mythical 20,000 mark in the 10 days, the chart suggests the rally will quickly run out of steam.

Cramer made it clear that Boroden is not predicting a top in the Dow or a crash, but rather that the current run-up in the stock market is coming to a natural end.

Cramer then turned his attention to the weekly chart of the S&P, where Boroden sees a similar cluster of Fibonacci time cycles -- seven of them -- coming due in the next 10 days. Last February, Boroden's checks predicted the S&P could run all the way up to 2,223 before declining. The S&P topped that level 50 points ago and now the index has a powerful ceiling of resistance running from 2,285 to 2,335. This means 10 points from its current position, gains will become more difficult.

The bottom line of Boroden's analysis is investors should become more cautious on the broader market. While she is not predicting a top, she does believe that if the Trump rally begins to take a real breather, or even reverse, it will happen over the 10 days.

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